Successful people are always looking for opportunities to help others. Unsuccessful people are always asking, “What’s in it for me?”

Brian Tracy

The conflict between Israel and Hamas continues to be the main price driver for the oil complex. Yesterday the market was mostly under selling pressure on talks that a truce between both sides is near. Overnight the fighting has continued as the plethora of diplomats from the UN, US, Europe and Middle East all attempt to broker a deal between both sides. Part of the risk premium was taken out of the oil market on Tuesday but as talks linger as of this writing part of the risk premium is slowly coming back into the price. Until an official truce is announced the market is likely to be somewhat biased to the long side. However, Wednesday's session will be dominated by the 30 second news snippets that hit the media airwaves regarding the status of the cease fire talks.

Even as the talks continue an explosion hit a bus in the center of Tel Aviv while bombs are still flying from both sides. US Secretary of State Clinton is now in the region and has already had discussions with both side of the conflict including the President of Egypt who is also attempting to broker a truce. At the moment Reuters is reporting that Israel's leading newspaper said an emerging outline of a ceasefire agreement called for Egypt to announce a 72 hour ceasefire followed by further talks on long-term understandings. There are still many open issues from both Israel and Hamas that still need to be resolved before the deal can be agreed to and announced.

I would expect something to be done over the next twenty four hours or less. However, if the truce that is announced is as described above I do not think the entire risk premium will recede from the price of oil as the fact that more talks will occur indicates that the truce is one that could be violated relatively quickly. The geopolitics will keep a floor on the price of oil until it is clear that a long term agreement has been reached.

On the economic front some mixed signals overnight. First China... the main oil demand growth engine of the world reported a 13.8% increase in its crude oil imports for October compared to last October. That said I am not sure how much of that increase was due to new demand versus how much of it went into its growing Strategic Petroleum Reserve. Offsetting the import increase in China... Japan's crude oil imports decreased by 24.5% in October versus last October.

In Europe the EU Finance Ministers ended their latest round of Greek discussions with no solution other than an agreement to resume talks next Monday. There is still a disagreement between the EU and the IMF on how to help bring Greece back from its deep and ongoing recession. As I have discussed on many occasions this situation has been evolving for four years and based on everything that is floating around the media airwaves this situation will continue to be a negative cloud over Europe well into the future.